Would really appreciate answers to this question I had..
Say a person did 2 yrs IB + 2yrs PE + top MBA and then a nice PE job.
What happens if that person loses the post MBA PE job ( either fired or firm goes down) 3~4 years down the road?
Can they just lateral to other PE firms? What are options outside of PE? Work for former portfolio companies (If so, what level/position would you go in as?) I'm trying to gauge the security of this path.
Thanks!!
Wouldn't VC be an option? And I'm sure if the company went under, you could lateral to another PE firm. Especially if they have the above credentials, they would probably have a strong network.
That's called retirement. With those creds, the person should be competent enough to be a successful entrepreneur.
What do you think? They'll get a new job wherever they can, in this economy.
Are you expecting to have an answer or someone hold your hand for every step of your career for the rest of your life? WTF? I find this to be a bizarre question.
PE. Hedge fund.
Strange question for sure.
It simply depends on what's available. Chances are they would try to lateral to another PE firm, but as many of you know, or will learn, those opportunities are few and far between and the timing generally has to be just right.
You would also have to be careful to consider what role you played in either getting fired or the firm not being able to raise a new fund, or whatever the scenario is. If you look like you had something to do with the poor performance, that could be a big red flag to future employers.
I don't think people often think about the difficultly in raising a fund, since most of the site's members are targeting megafunds...but there is never a guarantee that fund raising is going to go smoothly. Fund raising for smaller or newer funds is tremendously difficult and I believe it will only get worse in the near future. Investors are being much more stingy with their capital and are choosing to invest primarily in funds that can show top tier returns...which isn't absurd or anything...but gone are the days when it seemed as though anyone could start a PE shop because everyone was trying to put money to work. It seems that legislative restrictions have curtailed capital coming from institutional investors like banks and foundations and universities are generally at their authorized limit of alternative asset allocation...and some are even over allocated and will be scaling back.
So, it will depend entirely on the environment and what's available at the time and what the person's expectations might be due to their personal life, etc. Nothing is ever super secure, but as other's have alluded to, you should be in a fairly good place financially speaking and have the skills to run or find someone to run a small business that you can purchase, etc.
Regards
Great answer by cphbravo96. I share the same viewpoint.
I've seen people in their 30s and 40s lose their PE jobs. If the person is a mid-tier professional (VP, Principal), generally they look to secure another PE job. At that point you've got 10 years of experience. While you can pursue other avenues, your #1 skillset is M&A, particularly in a PE environment. This is also the environment where you'll get paid the most. For some people, they are able to secure another job. Others do business development or go to the sell side and do investment banking. I've even seen some try successfully start something entrepreneurial. There are plenty of options, but none of them are "easy" or "guaranteed."
For Partner level professionals, often times they'll start their own boutique firm. Some are successful joining another established PE firm. This can prove incredibly difficult if they don't have a strong track record, particularly for the reasons stated by cphbravo96.
And just to add a little more to what was said above, even experienced, successful fund managers can find it difficult to get a new fund off the ground. I've been involved (in different capacities) with two separate funds that were spin outs of other funds. Both struggled, to some degree, with fundraising because investors will always look at the person they've known for 10 years, standing next to the new partners that guy is working with and view you as a totally new group. That's just the nature of the beast.
One fund I worked with was fairly well known, spun out, purchased the current portfolio with the backing of a very well know bank, successfully deployed that capital and has done pretty well on that fund. When they were fund raising for the next fund, they brought on a new partner and people looked at them sideways, like they were aliens. They ended up raising the money but I suspect it was no where near what they initially wanted to get and they didn't receive the backing of institutional investors like they thought they otherwise would.
And just think about it, if you are in charge of placing investors money into a PE fund and you can put $50mm into 2 different funds, one of which is a spin-out of an existing fund or you can put $100mm to work at Bain or KKR or any other mega fund, what are you going to do?
If you lose a $100mm in a fund at KKR, people are going to be pissed, but ultimately they will shrug and say, "Who knew that would happen?". If you put $50mm into a fund that's just getting off the ground and they go belly up, you will be out of a job, because everyone is going to say, "Why the hell did you do that?"
Obviously a very crude example, but hopefully it illustrates the point.
Regards
What happens to the persons carried interest? Does he still get it after being laid off?
if a pe fund is in the position where it's laying people off, its pretty unlikely their fund is generating any meaningful positive carry
What about Sr mgr/ director level in corp dev at F500 be an option for ~10 yrs of PE experience?
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